Three top multi-cap funds made cheaper by the correction

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The Nifty has corrected about 9% from its peak at the end of January 2018. A number of mutual funds have fallen along with it, making them cheaper now. That does not automatically make them a ‘bargain.’ You should still invest in funds that suit your risk appetite and time horizon and preferably through SIPs or Systematic Investment Plans for the reasons we list here. However, if you do have extra cash from a year-end bonus or profit, you may want to look at the following funds for investment. Note that you should have a time horizon of at least five years for any kind of equity investment.

Why Multicap Funds

In this analysis, we focus exclusively on equity multi-cap funds because these funds invest in both small and large companies. You are thus spared the trouble of choosing between large and small cap funds and rebalancing between them. Switching between these fund categories also amounts to redemption and will attract capital gains tax. It can also attract exit load if done within the exit load time period. Multicap funds do this job for you, lowering your involvement and costs.

Aditya Birla Sun Life Advantage Fund – Down 7.9%

Time Period

Annualized Returns (%)

1 year

10.8

3 year

10.9

5 year

22.5

10 year

12.2

This multi-cap fund has outperformed its benchmark and category over the past five and past three years. It has a five year annualized return of 22.5%. The fund counts HDFC Bank, Infosys and Reliance Industries as its top three holdings and has been managed by Satyabrata Mohanty since 2011. However, the fund is down 7.9% over the past three months, opening up a strong buying opportunity.

DSP BlackRock Equity Opportunities Fund – Down 6.7%

Time Period

Annualized Returns (%)

1 year

11.7

3 year

12.3

5 year

20.08

10 year

12.95

This fund is also a benchmark and category outperformer albeit, with a long history. It has beaten its benchmark and category average over the past three, five and ten years and has delivered a return of 18.6% since launch, at the turn of the millennium in 2000. A Rs 1 lakh invested at launch would be Rs 21.5 lakh now.

The fund is down 6.7% over the past three months. It counts HDFC Bank, ICICI Bank, Tata Steel and SBI as its top holdings. The fund has been managed by Rohit Singhania since July 2015 and has added a new manager, Jay Kothari in March 2018.

SBI Magnum Multiplier Fund – Down 3.25%

Time Period

Annualized Returns (%)

1 year

13.6

3 year

10.08

5 year

20.28

10 year

12.98

This fund has beaten its benchmark and category average over the past five and ten years. It has also done so over the past three years for its benchmark but not its category.

The fund is down 3.25% over the past three months. It counts ICICI Bank, HDFC Bank and Bharti Airtel in its top three holdings. The fund has been managed by Saurabh Pant since September 2016.